José Alberto Fuinhas

An ARDL Approach to the Oil and Growth Nexus: Portuguese Evidence

Abstract In the literature, the causal relationship between oil consumption and economic growth has been poorly studied. Portugal is a medium-sized economy, which has experienced several episodes that make it of particular interest in the study of periods of economic expansion and stagnation. Portugal is constrained by external energy dependency and, due to international commitments, it is also faced with energy preservation policies that may have deep implications to its economic growth. This article examines the causal nexus between economic growth and oil consumption in Portugal, using the ARDL bounds test approach with annual time series data from 1965 to 2009. Results suggest that oil consumption causes growth in the long run and short run, and growth causes oil consumption in the long run and short run. Therefore, an energy policy that reduces oil consumption puts a slight constraint on gross domestic product growth, but growth strongly contributes to heightening Portugals oil dependence.

Are renewable energy policies upsetting carbon dioxide emissions? The case of Latin America countries

The impact of renewable energy policies in carbon dioxide emissions was analysed for a panel of ten Latin American countries, for the period from 1991 to 2012. Panel autoregressive distributed lag methodology was used to decompose the total effect of renewable energy policies on carbon dioxide emissions in its short- and long-run components. There is evidence for the presence of cross-sectional dependence, confirming that Latin American countries share spatial patterns. Heteroskedasticity, contemporaneous correlation, and first-order autocorrelation cross-sectional dependence are also present. To cope with these phenomena, the robust dynamic Driscoll-Kraay estimator, with fixed effects, was used. It was confirmed that the primary energy consumption per capita, in both the short- and long-run, contributes to an increase in carbon dioxide emissions, and also that renewable energy policies in the long-run, and renewable electricity generation per capita both in the short- and long-run, help to mitigate per capita carbon dioxide emissions.

How electricity generation regimes are interacting in Portugal. Does it matter for sustainability and economic activity

This paper uses monthly data for the time span 2006:M01 to 2014:M06, to study the relationship between electricity generation regimes, both ordinary and special, and economic activity in Portugal. An autoregressive distributed lag bounds test approach is pursued to analyse the short- and long-run dynamics between renewable/non-renewable electricity sources and industrial production. Results show that both ordinary thermal sources and hydro sources are driving forces behind electricity from the special regime. Economic activity is stimulating the special regime, but, conversely, the special regime hampers the growth of industrial production. It is demonstrated that a crucial role is being played by large-scale hydropower in accommodating the special regime in the electricity mix. This source is causing economic activity, while at the same time, backing up new renewable sources.

Does oil consumption promote economic growth in oil producers

Purpose The oil-growth nexus is studied in a panel of Organization of the Petroleum Exporting Countries (OPECs), for a long time span (1960-2011), controlling for the specific context of oil production. Their membership in the cartel put them under a common guidance, which originates phenomena of cross-section dependence/contemporaneous correlation in the panel. Design/methodology/approach Recent panel data estimators and co-integration analyses are both pursued and discussed, namely, dealing with the heterogeneity of panels and the countries’ specific effects. The Driscoll–Kraay estimator proves to be appropriate in handling the panel properties. Findings Full understanding of the oil-growth nexus requires the short- and long-run effects to be broken down. The growth hypothesis was found only in the short run. The results suggest the presence of the resource curse phenomenon and prove that the cartel’s long-run growth goal could not being fully accomplished. Actually, both oil production and prices are not promoting economic growth in OPEC countries. Originality/value The focus is on a group of countries which, besides being oil exporters, have an institutional connection between them, i.e. the OPEC cartel. The paper also contributes by framing the relationship between oil consumption and economic growth within a context of countries that are primary energy producers. Additionally, the paper uses a novel econometric approach and a long time span (52 years) not tested.

Could alternative energy sources in the transport sector decarbonise the economy without compromising economic growth

The transition towards a low-carbon transport sector (TS) plays a fundamental role on the decarbonisation of economies. The effects of both conventional (fossil fuels) and alternative (renewable fuels and electricity) energy consumption in the transport sector, economic growth, and carbon dioxide emissions were analysed by using a panel vector autoregressive of 21 high-income Organization for Economic Co-operation and Development countries from 1990 to 2014. The results support the feedback hypothesis between both conventional and alternative TS energy sources and economic growth. In other words, electricity use on TS has enlarged the economic growth, while consumption of renewable fuels is actually hampering it. Additionally, TS fossil fuels consumption is contributing to economic growth. With reference to the environmental impacts of TS energy use, this paper highlights the harmful effect of conventional energy sources on the environment. However, there is no evidence wherein TS alternative energy sources are directly linked with a reduction of carbon dioxide emissions. Accordingly, the promotion of alternative TS energy sources should deserve further attention. On the one hand, there is evidence that the use of renewable fuels is obstructing economic growth. On the other hand, the use of both TS electricity and renewable fuels is not reducing carbon dioxide emissions.

On the Dynamics of Renewable Energy Consumption (Aggregated and Disaggregated) and Economic Growth: An Approach by Energy Sources

Abstract This chapter analyzes the electricity-growth nexus in a context of energy transition from conventional to renewable sources. Such transition requires making options as to what concerns the composition of the electricity mix, namely by choosing the contribution from each source to the mix. As such, this chapter assesses the interactions of sources and the consequences of that diversification on the economic growth, by focusing on Germany, which is in the phaseout stage of the nuclear baseload source. Germany seems to fulfill the appropriate conditions to make that transition successfully, thus assuring that the growth hypothesis is verified for both the conventional and the renewable sources. Additionally, this chapter discusses the critical factors, the countries’ characteristics, and the electricity system as a whole, which must be met to keep going successfully on the energy transition, namely by highlighting the role of the demand side.

Does financial openness increase environmental degradation? Fresh evidence from MERCOSUR countries

This article researches the impact of financial openness on environmental degradation in the MERCOSUR countries over the time spanning from 1980 to 2014. The Panel Autoregressive Distributed Lag (PARDL), in the form of Unrestricted Error Correction Model (UECM), was computed with the purpose of decomposing the total effects of variables in their short- and long-run ones. The results of short-run impacts and elasticities of PARDL model showed that the financial openness increases the CO2 emissions both in the short- and in the long-run. Moreover, the results also support that economic growth, consumption of primary energy, and agricultural production are responsible for an increase of emissions in the MERCOSUR countries. Therefore, these empirical findings will help expand the literature that assesses the impact of financial development on the environment. The results also point out to the need of policymakers to change the way the energy mix is financed.

The impact of economic growth on CO 2 emissions in Australia: the environmental Kuznets curve and the decoupling index

Australia is the sixth largest country in the world, celebrating its 26th consecutive year without a recession. However, the country is one of the ten largest emitters of greenhouse gases, mainly caused by energy use. As such, Australia is facing a trade-off between economic growth and reducing carbon dioxide (CO2) emissions. This paper empirically analyses the relationship between economic growth and CO2 emissions in Australia, based on annual data from 1965 to 2016, considering the consumption of the fossil fuels oil and coal and renewable energy. This analysis is performed using the environmental Kuznets curve (EKC) and the Decoupling Index (DI). The EKC is assessed by employing the autoregressive distributed lag model. In addition, a robustness check is provided through the vector error correction model, which allows for the employment of the Granger causality test. The results show that in Australia, there is evidence for the EKC hypothesis, and that the country is undergoing increasing relative decoupling. These results mean that economic growth causes CO2 emissions and consequently environmental degradation. To achieve environmental targets and reduce the rate of CO2 emissions while continuing to grow, Australia needs to implement measures and policies to cut CO2 emissions, such as energy demand management and control, energy efficiency, reducing fossil fuel consumption, and investing in renewable energy technology.

Interactions between electricity generation sources and economic activity in two Nord Pool systems. Evidence from Estonia and Sweden

ABSTRACT The interactions between electricity sources and industrial production in Estonia and Sweden are analysed based on monthly data. The availability of data defines the time spans from January 2010 to September 2015 for Sweden and from April 2010 to December 2014 for Estonia. These countries are particularly interesting to study because of their dissimilar generation mix. Estonia’s generation mix is based on oil shale, while Sweden’s is based on nuclear plants and hydroelectricity. In short, both countries’ energy mixes are based on endogenous natural resources. The ARDL model was applied, allowing the long-run and short-run effects to be captured. The results prove that economic growth is sustained by natural endogenous resources. Estonia should continue to improve the usage of renewable energies, using fossil sources in support, in order to reduce emissions and to meet international environmental commitments. Sweden should promote the efficient usage of various renewable sources.

Renewable energy and greenhouse gas emissions from the waste sectors of European Union member states: a panel data analysis

In the last two decades, there has been a rich debate about the environmental degradation that results from exposure to solid urban waste. Growing public concern with environmental issues has led to the implementation of various strategic plans for waste management in several developed countries, especially in the European Union. In this paper, the relationships were assessed between economic growth, renewable energy extraction and greenhouse gas (GHG) emissions in the waste sector. The Environmental Kuznets Curve hypothesis was analysed for the member states of the European Union, in the presence of electricity generation, landfill and GHG emissions for the period 1995 to 2012. The results revealed that there is no inverted-U-shaped relationship between income and GHG emissions in European Union countries. The renewable fuel extracted from waste contributes to a reduction in GHG, and although the electricity produced also increases emissions somewhat, they would be far greater if the waste-based generation of renewable energy did not take place. The waste sector needs to strengthen its political, economic, institutional and social communication instruments to meet its aims for mitigating the levels of pollutants generated by European economies. To achieve the objectives of the Horizon 2020 programme, currently in force in the countries of the European Union, it will be necessary to increase the share of renewable energy in the energy mix.